Repealing PNTR, Eliminating De Minimis Among China Commission Recommations
Source
American Shipper
Post Date
12/11/2024
The U.S.-China Economic and Security Review Commission offered 32 recommations in its annual report to Congress, including those listed below related to bilateral trade. The commission is known for its generally hardline stance on U.S.-China relations and typically calls for relatively aggressive U.S. actions in response to associated challenges. While those recommations are often not acted upon, the incoming Trump administration has signaled its intent to take a tougher approach to China and could therefore advance some of the measures outlined below. PNTR. Congress should repeal permanent normal trade relations status for China, which would increase tariffs on goods imported from that country. The report said this change could reintroduce annual reviews of China? trade practices and thus give the U.S. ?ore leverage to address unfair trade behaviors.?
De Minimis. With respect to imports sold through an online marketplace, Congress should eliminate Section 321 of the Tariff Act of 1930 (the de minimis exemption), which allows goods valued under $800 to enter the U.S. duty-free ?nd, for all practical purposes, with less rigorous regulatory inspection.?De minimis entry ?rovides a means for some Chinese manufacturers to avoid China-specific tariffs,?the report asserts. ?nscrupulous Chinese entities also take advantage of the import channel to funnel fentanyl-related materials into the North American market.?
Tariff Evasion. Congress should direct U.S. Customs and Border Protection, in conjunction with the Department of Commerce, to develop assessment tools capable of identifying the true origins of parts, components, and materials contained in products entering the U.S. to prevent tariff evasion and limit safety and security risks in light of the increasing complexity of global supply chains. Chinese companies ?mploy a wide range of illegal and deceptive tactics to lower or evade U.S. import duties,?the report asserts. ?rade misinvoicing and other U.S. customs violations have grown more widespread since 2018. Trade data indicate that some countries have emerged as hubs for the transshipment of goods and duty evasion through circumvention and related strategies.?
Import Restrictions. Congress should consider legislation to restrict or ban the importation of certain technologies and services controlled by Chinese entities, including autonomous humanoid robots with advanced capabilities of dexterity, locomotion, and intelligence as well as energy infrastructure products that involve remote servicing, maintenance, or monitoring capabilities, such as load balancing and other batteries supporting the electrical grid, batteries used as backup tems for industrial facilities and/or critical infrastructure, and transformers and associated equipment. Export Controls. To enhance the effectiveness of U.S. export controls, Congress should (1) provide more resources to improve the analytic and enforcement capabilities of the Bureau of Industry and Security, including by hiring more agents and analysts for the Office of Export Enforcement and increasing access to data and data analysis tools, (2) require that within 30 days of granting a license for export to entities on the Entity List, including under the Foreign Direct Product Rule, BIS must provide all relevant information about the license approval to the relevant congressional committees, (3) direct the president to designate a senior official to coordinate administration efforts to prioritize bilateral and multilateral support for U.S. export control initiatives, and (4) direct the president to establish a joint interagency task force to examine how to limit China? access to and development of advanced technologies that pose a risk to U.S. national security, including possible new export controls, authorities, institutions, or international arrangements. ?s China increasingly asserts itself as a significant military power, export controls have emerged as a central tool in U.S. efforts to deny China direct access to critical dual-use goods and advancements in national security-sensitive technologies,?the report states. ?owever, a number of operational challenges diminish their effectiveness, including lack of coordination among key allies, compliance challenges, and uneven enforcement.?
Foreign Investment. Congress should direct the White House to a new office to oversee investments into countries of concern, including China. The office should be tasked with (1) prohibiting outbound U.S. investment through a sector-based approach in technologies the U.S. has identified as a threat to its national or economic security, (2) expanding the list of covered sectors with the goal of aligning outbound investment restrictions with export controls, and (3) developing a broader mandatory notification program for sectors where investment is not prohibited to better identify potential high-risk investments. The report notes that uncertainty over China? economy and heightened geopolitical tensions have weighed on investment in that country and that a shift in U.S. imports toward Mexico, Vietnam, and other economies suggests that a broader diversification of trade away from China may be emerging. Product Safety. Congress should (1) grant the Consumer Product Safety Commission unilateral mandatory recall authority over products where the Chinese seller is unresponsive to requests for further information or to initiate a voluntary recall and the CPSC has evidence of a substantial product hazard, and (2) classify Chinese e-commerce platforms as distributors to allow for enforcement of recalls and other safety standards for products sold on these platforms. Congress should also direct the Government Accountability Office to investigate the reliability of safety testing certifications for consumer products and medical devices imported from China. ?he rapid escalation of e-commerce sales impedes U.S. efforts to ensure the safety and regulatory compliance of consumer products flooding the market from China,?the report explains. ?hough the quality of goods sourced from China has improved somewhat over the past two decades as a result of increased due diligence and monitoring on the factory floor, significant exceptions remain, and overall product quality and safety still fall short of U.S. standards.?In addition, ?fforts by oversight agencies ?to protect U.S. consumers have been hampered by falsification of safety documents, the rise of small parcel shipments, and lack of responsiveness from many Chinese exporters.?
USMCA. Congress should require the Office of the U.S. Trade Representative to report within 90 days on the operation of the U.S.-Mexico-Canada Agreement, with specific information on Chinese-affiliated investments in those countries, trade flows of products made in China to those countries, and trade enforcement actions by those countries regarding Chinese-made goods. FTZs. Congress should pass legislation eliminating the ability of entities operating in U.S. foreign-trade zones to qualify for zero or lower tariffs on products imported from China or Chinese-affiliated or -invested entities into the FTZ and then re-exported.